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Hotel stocks in demand: Lemon Tree, Oriental, Kamat Hotels surge up to 10%

Going forward, analysts expect FY24 to stay strong for the sector supported by full resumption of the economy, India's G20 presidency in 2023, ICC Men's world cup and easing of E-visa rules.

Hotels, tourism, hospitality, Hill stations

SI Reporter Mumbai

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Shares of hotel companies were in focus and trading higher by up to 10 per cent on the BSE in Thursday’s intra-day trade in an otherwise range-bound market amid expectations of strong average room rates (ARR) in January-March quarter (Q4FY23) as witnessed in the preceding October-December quarter (Q3FY23).

Lemon Tree Hotels, Oriental Hotels and Kamat Hotels (India) rallied between 6 per cent and 10 per cent on the BSE. Indian Hotels Company, Chalet Hotels and EIH quoted 1 per cent higher, as compared to 0.04 per cent rise in the S&P BSE Sensex at 11:49 AM.

Owing to continued demand from business and leisure travellers and also aided by strong wedding season, analysts at ICICI Securities expect Q4FY24E to see another strong performance from the hotel sector. For Q4FY23, as a whole, the brokerage firm expect passenger traffic to be at 105 per cent of pre-Covid levels to 3.8 crore. Analysts expect enhanced domestic tourism and sharp rebound in corporate travel to aid in healthy revenue growth for Q4FY23E.

“Going forward, we expect FY24 to stay strong for the sector supported by full resumption of the economy, India’s G20 presidency in 2023, ICC Men’s world cup and easing of E-visa rules,” ICICI Securities said in its result preview.

Among the individual stocks, Kamat Hotels (India) was locked at the upper circuit for the second straight day, up 10 per cent at Rs 168.30 on the BSE. The stock trades at its 52-week high and has rallied 21 per cent in past two trading days.

Shares of Oriental Hotels too hit a 52-week high of Rs 89.28, surging 9 per cent on the BSE. The stock surpassed its previous high of Rs 88.05, touched on November 30, 2022.

Oriental Hotels have strong parentage by virtue of it being part of an associate of the Indian Hotels Company Limited (IHCL). Oriental Hotels has strong operational and financial linkages with IHCL and enjoys financial flexibility/lender comfort arising from its parentage.

The rating agency ICRA expects the revenue growth momentum of Oriental Hotels to sustain going forward, with healthy demand outlook for the hotel industry, while improved operating leverage and sustenance of cost-optimisation measures undertaken by the company during the pandemic period likely to support accruals.

ICRA expects the coverage metrics to gradually improve from current levels over the medium term, supported by its anticipated healthy accruals and absence of debt-funded capex plans. Oriental Hotel’s liquidity position also expected to be adequate over the medium term, ICRA had said in its rationale.

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First Published: Apr 20 2023 | 12:19 PM IST

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